The surging dollar sank the crop markets Thursday morning. The European Central Bank announced that it will follow the U.S. Fed’s recent policy of Quantitative Easing (buying huge quantities of EU government bonds) in an effort to boost European economies. The U.S. dollar surged on the news, thereby raising the comparative price of American goods on global markets. As one might expect, the crop markets reacted poorly to the shift. Corn was certainly no exception. March corn futures slumped 2.5 cents to $3.855/bushel late Thursday morning, while July slid 2.0 to $4.005.
The soy complex turned unanimously lower. Optimism about the demand outlook seemed support soybean and meal futures last night, but futures reversed this morning. The surging value of the dollar, which boosted the implicit cost of those goods to export customers very likely caused the reversal. Sizeable crude oil losses probably weighed upon the soyoil market as well. March soybean futures fell 4.0 cents to $9.795/bushel just before lunchtime Thursday, while March soyoil dropped 0.41 to 32.00 cents/pound, and March meal sagged $0.6 to $329.9/ton.
Wheat futures proved relatively stable. The implied surge in U.S. grain prices didn’t help the wheat markets either, especially with so many in the industry already regarding U.S. wheat as being too expensive for international customers. However, the Russia-Ukraine conflict seemed to escalate somewhat Wednesday night, which explains the early rally in wheat futures as well as the comparative firmness seen at midsession. March CBOT wheat edged up 1.75 cents to $5.385/bushel in late Thursday morning action, while March KC wheat sank 1.25 cents to $5.71/bushel, and March MWE wheat skidded 1.0 to $5.80.
Cattle futures rallied despite cash weakness. Southern Plains cattle prices dipped $2-$4/cwt (cents/pound) from last week’s results this morning, Packers probably went ahead due to big snowfall around Amarillo. CME futures climbed despite the cash news, possibly because traders were expecting larger spot market losses. February live cattle futures advanced 0.90 cents to 154.60 cents/pound shortly before lunchtime Thursday, while the April contract surged 1.37 cents to 153.25. January feeder cattle futures jumped 1.15 cents to 216.85, and March feeders leapt 2.45 to 207.75.
CME hogs traded firmly as well. Although the surging value of the U.S. dollar also increases the export cost of U.S. meat products, CME traders often pay little attention to greenback fluctuations. Still, one has to wonder if the negative impact of the currency move caused hog futures to set back from early spot-market-driven highs. February hog futures rallied 0.45 cents to 72.80 cents/pound around midsession Thursday, while June hogs bounced 0.25 cents to 84.40.
Cotton futures also slumped despite big equity gains. This week’s stock market strength has apparently lent considerable support to ICE cotton futures, since a strong economy implies robust apparel demand. Stock indexes surged even higher in response to the ECB move, since the U.S. markets look like the place for investors to be. Nevertheless, the increased values of the dollar apparently undercut cotton. March cotton futures drooped 0.36 cents to 57.65 cents/pound just before midday Thursday, while the July contract stumbled 0.42 to 59.40.